The Lege will take another crack at payday lending

I’m glad to see this, because the Lege definitely left business unfinished last time.

About 83 percent of customers in Beaumont and 75 percent in the Houston and San Antonio metro areas are locked in a loan renewal cycle, latest lender reports show.

State Sen. Leticia Van de Putte, D-San Antonio, and state Sen. John Whitmire, D-Houston, both members of a Texas Senate committee examining the problem, said data and testimonials from payday customers statewide support legislation to prevent so many Texans from being financially exploited.

“In a perfect world you wouldn’t need (payday lenders),” Whitmire said. “But I do know that people can’t make it sometimes because they have no line of credit and no credit – and they can go to these institutions, but that doesn’t mean that they have to be held up.”

[…]

The new data confirms Texans typically pay more for short-term credit than consumers in other states. A $500 loan initially costs customers about $110 in Texas compared to only $55 in Florida and $65 in Oklahoma, where the industry is better regulated, said Ann Baddour, a policy analyst for Texas Appleseed, part of a coalition of secular nonprofits and religious groups that advocate stronger rules and lower-cost credit options.

“We find it extremely troubling that Texans are paying more for these products than others in other parts of the country – there has to be a limit to the number of fees set up for the same loan,” Baddour said.

[…]

Last month, members of the Senate Business and Commerce committee led by Sen. John Carona, R-Dallas, reviewed data and heard testimony.

“Landmark legislation in the 82nd Legislature enabled us for the first time to get some hard numbers about the payday and auto title loan industry,” Carona said. “We have enough information now to come back and address the abuses in the industry.”

We know what the problem is, it’s just a matter of the Legislature exerting the will to do something about it. This isn’t about ideology – the issue unites such disparate legislators as Rep. Tom Craddick and Sen. Wendy Davis. Unfortunately, the legislation that was passed last time was a water-down compromise that really didn’t do much of anything. As it happens, the person responsible for those watered-down bills, Rep. Vicki Truitt, the chair of the House Pensions, Investments & Financial Services Committee, lost her primary race this May, so someone else will be carrying this ball in the House. I hope that’s a good sign, but the even bigger problem over there remains.

Rep. Gary Elkins, R-Houston, himself a longtime payday loan business owner, was among those who blocked the proposals. He said the cities’ regulations are unnecessary and unconstitutional and existing federal consumer and credit laws provide enough oversight.

“The Legislature clearly considered the issue … and the Legislature decided not to pass those restrictions,” he said. “Anybody can pay off their loan anytime they want so the consumers obviously have that choice. … You can stay in debt on MasterCard or Visa forever.

“Do we need a law to say every month you have to pay down your MasterCard or Visa because some city council thinks that’s what you ought to do?”

You kind of have to admire Rep. Elkins’ sheer brazenness here. He makes his living off the misery of other people, he will do whatever it takes to defend the money he makes through the immiseration of those people, and he doesn’t give a damn what you think about it. He’s a State Representative, he has lobby money and his personal relationship with other representatives in his corner, and you don’t. So there.

UPDATE: Be sure to read Forrest Wilder’s story about new frontiers in the payday lending industry. I’d ask how these guys could get any sleazier, but I fear the answer I’d get.

I’d like to ask the following questions of Charles Kuffner regarding payday loans. I’d like to facilitate a discussion to see if we can make some progress regarding this issue. As you seem to know a lot about this topic, please answer in detail.

Do people choose payday loans because they are stupid?
What other choices do people have instead of payday loans?
How many times does the average Texas borrower renew a payday loan?
What would you consider to be a “cycle of debt”?
Once a borrower gets burned by a payday loan, do you think they use it again?

[…] city taking action on this. While it is the case that bills to regulate payday lending have been filed again in the Legislature, there’s no reason to believe any of them will pass, for the payday […]